Eligibility of costs in the Horizon 2020 funded EUROfusion project

Presented by:Michael Erdmann, EUROfusion Coordinator Unit, Max-Planck-Institute for Plasma Physics

Garching, 3 December 2015

Subcontractors and other third party support »

H2020 - Eligibility of costs

Actual Costs Unit CostsFlat-rate Costs

Direct Costs Indirect Costs Specific Costs

Mobility

Unit Costs General Eligibility Conditions

Specific Eligibility Conditions

‘Overheads’

Subcontracting

Personnel

Travel Equipment

Goods & Services

Other Direct Costs

Eligibility of direct costs

Actual Costs

Direct Costs

Subcontracting

Personnel

Travel Equipment

Goods & Services

Other Direct Costs

General Eligibility Conditions

Specific Eligibility Conditions

Eligibility of direct costs of subcontracting

SubcontractingSpecific Eligibility Conditions

Direct Costs Costs that are directly linked to the action implementation and can therefore be attributed to it directly.

caused » in full by the action or caused in full by several actions and the »attribution to a single action can, and has been, directly measured

Actual Costs General Eligibility Conditions

Subcontracting - general eligibility conditions

Actual General conditions for actual costs to be eligible

‘Eligible actual costs’ must meet the following criteria: OKactually incurred » by the beneficiary

incurred » during the action duration (exception for final report)

indicated » in estimated budget set out in Annex 2

incurred in connection with the action » as described in Annex 1 and necessary for its implementation

identifiable » and verifiable, properly recorded in the beneficiary’s accounts

in compliance » with applicable national law on taxes, labour & social security

reasonable » , justified, complying with principle of sound financial management

Art. 6.1

Subcontracting - specific eligibility conditions

Specific eligibility conditions Art. 6.2 bSubcontracting

Specific eligibility conditions for direct costs of subcontracting: OK

costs incurred for subcontracting of » action tasks described in Annex 1

purchased in accordance with relevant » public procurement rules (unless beneficiary is a private company or private association)

total estimated costs » of subcontracting per beneficiary set out in Annex 2

the following » obligations were extended to the subcontractor:avoiding conflict of interest (Article 35)• maintaining confidentiality (Article 36)• promoting the action and giving visibility to the EU funding (Article 38)• liability for damages (Article 46)•

Beneficiaries are expected to have all resources to implement their share of the action themselves. As an exception, however, they may involve third parties.

Subcontracting - ineligible costs

Costs based on activities implemented before the starting date of EUROfusion

Costs based on activities implemented after the date of project closure

Deductible VAT

Indirect costs

Costs that are invoiced to a third party and therefore not definitely and genuinely born by the beneficiary

Costs resulting from subcontracting between beneficiaries (not allowed in the same Grant Agreement)

Indicative list of ineligible costsSubcontracting

In addition to call upon subcontractors, EUROfusion beneficiaries may: purchase goods, works or services (Article 10),call upon linked third parties (Article 14) use in-kind contributions provided by third parties against payment (Article 11) or free of charge (Article 12)

to carry out work under the action and declare these costs for the action.

Excursus - other third party support

Four additional types of third party support Art. 10, 11, 12, 14

Beneficiaries are expected to have all resources to implement their share of the action themselves. As an exception they may involve third parties. All legal entities involved in the action by providing external support without having signed the Grant Agreement are called “third parties”.

a) b) c)

d)

CHARACTERISTICSImplement

action tasks

Provides resources or

services

What is eligible?

Must be indicated in

Annex 1

Indirect costs

Selecting the third party Articles

Sub-contractors YES NO PRICE YES NO

Best value for money, avoid conflict of interest

13

Contractors NO YES PRICE NO YESBest value for money, avoid conflict of interest

10

Linked Third Parties YES NO COSTS YES YES Must be affiliated

or have a legal link 14

In-kind Contributors NO YES COSTS YES YES

Not used to circumvent the rules

11 & 12

Third Party Involvement - Overview

Types of third parties

Excursus - other third party support

Subcontracting versus a) purchase of works and services Art. 10

Subcontracting (Article 13 GA) Works and services (Article 10 GA)implementation of action tasks » no implementation of action tasks but »

necessary for their accomplishment action tasks must be described in »Annex 1 but simplified approval procedure

tasks not described in Annex 1 »

costs are to be declared as “Direct »costs of subcontracting”

Costs are to be declared as »“Other direct costs”

no indirect costs » 25% indirect costs »

best value for money, if appropriate, lowest price »beneficiaries remain fully responsible for the work carried out by third parties. »

‘Entities with a legal link’ refers to an established relationship (between the third party and the beneficiary), which is:

not based on a contract for the purchase goods, works or services » anda legal relationship. »This may be either a legal structure (e. g. JRU) or implemented through an agreement or contract (not limited to the action).

Excursus - other third party support

b) Linked Third Parties (LTP) Art. 14

‘Affiliated entities’ or ‘entities with a legal link to a beneficiary can be linked third parties.

The beneficiary remains responsible towards the Commission for the work carried out by the LTP. Moreover, the beneficiary is financially responsible for any undue amount paid by the Commission as reimbursement of costs of their LTP.

Excursus - other third party support

b) Linked Third Parties (LTP) Art. 14

Additional characteristics of linked third parties:

LTPs must be » named in Article 14 of the GA.

Their » tasks and estimated costs must be identified in Annexes 1 and 2 (already at the moment of the GA signature or added later, through an amendment).

Work is usually carried out » independently and on the LTPs’ own premises.

Beneficiaries must ensure that their » GA obligations under Articles 18, 20, 35, 36 and 38 also apply to their LTPs.

LTPs claim their own costs » (all cost categories, including indirect costs at the 25% flat rate). No profit margin allowed!

c) in-kind contributions provided by third parties against payment

Excursus - other third party support

Art. 11

When no affiliation or established legal link exists, third parties can still provide external support (e. g. seconded staff, laboratory space, machines etc.) in the following forms:

Use of in-kind contribution against paymentThird parties contributing in-kind » make available some of their resources to a beneficiary without this being their economic activity.Third parties and their » contributions are set out in Annex 1.

Eligible costs are the amounts that the beneficiary pays to the in-kind contributors »within the limit of the third party’s costs (no profit margin allowed!)Indirect costs » (25 % flat-rate) of the third party are:

either not taken into account if used in the premises of the beneficiary, or• taken into account if used in the third parties premises•

Excursus - other third party support

When no affiliation or established legal link exists, third parties can still provide external support (e. g. seconded staff, laboratory space, machines etc.) in the following forms:

Use of in-kind contribution free of chargeThird parties contributing in-kind » make available some of their resources to a beneficiary without this being their economic activity.Third parties and their » contributions are set out in Annex 1.

The beneficiary may declare costs of in-kind contributors provided free of charge within »the limit of the third party’s costs. Costs must be included in the in-kind contributor’s accounts. They must be declared as receipts of the project.

Indirect costs » (25 % flat-rate) of the third party are:either not taken into account if used in the premises of the beneficiary, or• taken into account if used in the third parties premises•

and d) in-kind contributions provided by third parties free of charge Art. 12